The Employee Retention Credit Is Now Available to Businesses That Receive PPP Loans; Here’s How to Qualify

The Consolidated Appropriations Act (CAA), passed in December 2020, changes and updates to the prior economic relief legislation for COVID-19. The CAA clarifies and expands the Employee Retention Credit that was created by the CARES Act. All employers should review this legislation change to see if their 2020 payroll costs may qualify and review their situation to see if they can qualify for 2021.

The Employee Retention Credit has been opened up to companies that received PPP loans. Before the rule change as part of the CAA, businesses would need to choose one or the other. This payroll tax credit may provide significant additional cash to companies – provided they do not double count expenses for each program. Lurie advisors can provide guidance and service to help you maximize your eligibility. 

What Is the Maximum Employee Retention Credit?

Refunds may be available for $5,000 per employee for 2020, and potentially $14,000 per employee for 2021.

What Are the Qualifications for the Employee Retention Credit?

The criteria for the 2020 & 2021 Employee Retention Credit is different. You may qualify for this credit if any of the following apply to your business:

2020 ERC Qualifications

  1. Experienced a greater than 50% quarterly decline in gross receipts compared to the same quarter in 2019 (e.g. Q2 2020 compared to Q2 2019); 

  2. Fully or partially shut down due to government order at any point during 2020.

2021 ERC Qualifications

  1. Experienced a greater than 20% quarterly decline in gross receipts compared to the same quarter in 2019 (e.g. Q1 2021 compared to Q1 2019);  

  2. Experienced a greater than 20% quarterly decline in gross receipts in Q4 2020 compared to Q4 2019;  

  3. Fully or partially shut down due to government order at any point during Q1 or Q2.

For Guidance and Support with ERC & PPP - Contact Us

Our CPAs are advising clients across all industries on what economic relief, tax provisions, and employee retention programs are available to them as part of the CARES Act & CAA. From EIDL to PPP, and ERC – We’re here to help. >Contact us.

Employee Retention Credit

The criteria for the 2020 & 2021 Employee Retention Credit is different. Lurie has created a self-assessment tool to help you see if you qualify. Our team is ready to help you with all ERC questions, including how to get the maximum tax refund amount.
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